Abercrombie: We Believe The Stock Offers Value For LT Investors, Says William Blair

In a research note published Friday, William Blair analyst Amy Noblin reiterated an Outperform rating on Abercrombie & Fitch (NYSE:ANF), following the company’s second-quarter earnings, which topped both Noblin and the Street estimates on expense initiatives, which offset softer sales, mainly in international (Europe slowed). No price target was given. 

Noblin wrote, “we are pleased by the tremendous progress in the fashion content at both brands (which the customer is positively responding to), which combined with the new marketing is evolving customer perceptionof the brand, in our view. While teen headwinds remain strong and the evolution willtake time, the progress on fashion, marketing, supply chain, and profit-improvement initiatives is encouraging and gives us confidence that thecompany is on the right track to restore profitability (from a 5.4% operating margin in2013) and improve ROIC. With areasonable valuation of 18.2 times projected 2014 EPS and 15.5 times estimated 2015 EPS, compared with projected earnings growth of 20%and 17%, respectively (and to which we see upside potential), we believethe stock offers value for long-term investors with opportunity from: 1) improvement in U.S. store productivity, 2) growth in direct-to-consumer (DTC) penetration, 3) profitable international growth, and 4) continued cost reduction.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amy Noblin has a total average return of -8.4% and a 40.0% success rate. Noblin has a -14.6% average return when recommending ANF, and is ranked #2942 out of 3266 analysts.

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